What's Next?

Updated

Currently sitting in no man's land at pre-market today. Historically, when there is a massive sell-off, than a strong rally that follows, the two most common things to happen are then a retrace followed by a second rally higher or a double bottom. (duh) Usually the retrace is down to the 50 or 61.8 fib lines.

Those two zones currently sit about 8(240) and 14)236) points lower than the SPY currently is trading. The overall bull market (09-20) 31.8 retrace is sitting at around 235. So, the optimal long entry here is 235. A breakdown below 233 as a stop/loss. Next entry then being the double bottom, followed by the megaphone trendline.

Once, the white trendline is broken, I would expect a move up to the green box. When that happens? Who knows! The market could recover all of it's losses today, and be ready to break higher. Hence, the reason we are in no man's land. No reason to rush long or short right here. Will be waiting for either the break above resistance, or support being found around 235 to enter long here.

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As expected, once the yellow trendline was broken, an impulsive move higher did pursue.

Target has been reached, is there still room to the upside? Yes. The 278-280 area still appears to be the best place for a short set up here. As the 50 fib retrace and 50 dma sit right there as resistance. Along with the 280 level that has acted as a big pivot dating all the way back to the early 2018 sell-off.

285 and 292 then sit overhead next. 285 being the Feb lows are still in play for a test. I'd be very surprised if 292 happened. Ultimately, from here we'll be tapering off the longs.

Entry long here could see anywhere from a 10-20 point move higher, with downside risk of a 60 point move lower. Just following the risk/reward here.....

The yellow trendline will remain on the chart, as it remains important. As per the usual, these trends typical get retested as support.

Here's a hypothetical scenario we could see play out:

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Vix remains coiled up aswell:

Been waiting to see if it can close below 43 for a sign that there is further upside in the SPY ahead..

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Nasdaq 100 also lagging the SPY:

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These are the leaders of the market.....when tech leads, the market goes higher...when tech lags...there is more drop to come.

For example, here's the first 2018 sell-off:

Here's the one that corrected, and sold off further into december:

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cleaner view...

JTI96

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